Constellation Agrees to Acquire Robert Mondavi for $1 Billion

Constellation Brands, which owns a broad portfolio of beer, wine and spirits brands, signed an agreement yesterday to acquire the California wine pioneer, the Robert Mondavi Corporation, for about $1 billion. After receiving an unsolicited offer two weeks ago, the Mondavi family, which owns 85 percent of the voting shares, agreed to the deal.

The move is the culmination of financial troubles and internal squabbling that have plagued Robert Mondavi for a year. Hoping to remedy sluggish sales and inventory problems, several months ago the company announced a plan to split into two companies, sellingthe high-end luxury brands like Opus One and Robert Mondavi Winery Reserve, focusing on the under-$15 segment.

The major shareholders, Michael and Timothy Mondavi and Marsha Mondavi Borger, children of the founder Robert Mondavi, voted against the reorganization. Michael Mondavi, the former chief executive, criticized the plan and wasasked to resign from the board.

Taking notice of the strife, Constellation saw an opportunity. Its chief executive,Richard Sands, said he had been interested in acquiring the company for some time and first contacted Michael Mondavi a year ago. He was rebuffed but continued to follow the California company's movements.

"When they announced the reorganization, we thought it was quite a travesty for these brands," Mr. Sands said. The offer is $56.50 for each publicly traded Class A share, a 46 percent premium to the Oct. 11 closing price. The deal includesassumption of $325 million in debt.

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Yesterday, Robert Mondavi shares rose 50 cents, or about 1 percent, to $54.75 on the Nasdaq.

Since Sands took over in 1993, Constellation has been on an aggressive acquisition course, gobbling up 12 companies in 11 years. Last year, the company earned $220 million on sales of $3.5 billion. Recent acquisitions have included Blackstone, bought for $140 million, and Ravenswood Winery, for $149 million, both purchased in 2001. "With Robert Mondavi, we will emerge with an unmatched portfolio of wine offerings," said Mr.Sands, whose father started the company in 1945.

Both sons, who were once co-chief executives, were paid severance agreements of more than $1 million each last month, an arrangement that entitles them to 50 free cases of wine a year. Robert Mondavi, who is 91 and what many consider to be the father of California wine, will continue to be "brand ambassador."